Beacon Power To Build A Flywheel Plant To Keep The Grid In Good Health

Beacon Power, the flywheel energy storage company that won a loan from a controversial federal program and survived bankruptcy, will kickstart the construction of a project in Pennsylvania this Friday.

The Massachusetts company plans to build a 20-megawatt flywheel plant in the town of Hazle and sell its service to the region’s electric grid operator, PJM. The flywheels will store and then discharge electricity when PJM needs to balance the supply and demand of its grid and maintain a stable frequency of around 60 hertz. A grid experiences power fluctuations all the time, and maintaining that balance is critical for preventing blackouts.

A flywheel is a mechanical device that spins at a high speed while being powered by the electricity it takes from the grid. When it has to give the power back to the grid, the flywheel slows down its rotor and switches to a generator mode in order to discharge power.

As a recipient of a federal loan program funded by the 2009 economic stimulus package, Beacon seems to be panning out as a successful story. Beacon Power won a $43 million loan in 2010 to build a flywheel plant in Stephentown, New York. The company built the project but then filed for bankruptcy in October 2011. At the time, media reports compared Beacon to Solyndra, which won a $535 million loan from the same program to build a solar panel factory and then the filed for bankruptcy a few months before Beacon did.

While Solyndra’s demise became permanent, Beacon found help in Rockland Capital. Rockland, a private equity firm, bought the flywheel developer last year and agreed to pay back $30.5 million, or about 70% of the federal loan Beacon had drawn. The loan will mature in June 2030. Beacon became a private company after being sold to Rockland.

Beacon had to file for bankruptcy partly because it was counting on a new federal rule to be in place that would’ve enable the company to generate revenues sooner, said Barry Brits, Beacon’s CEO. The weak economy and low natural gas prices also were factors.

The rule, approved by the Federal Energy Regulatory Commission in the fall of 2011, requires grid operators to pay higher prices to companies that could provide the fastest and more accurate injection of power into the grid to help balance the supply with demand. The commission gave grid operators time to draft their own rules for carrying out this mandate, so Beacon wasn’t able to receive higher prices for its service as early as it had anticipated, Brits said.

Up until now, that kind of grid balancing service has mostly come from mostly a type of natural gas power plants called the peaker plants. Those natural gas power plants are generally not so efficient and are expensive to operate. Many utilities today rely on a newer and more efficient version of natural gas power plants to produce electricity around the clock for consumers and businesses.

With the increase in solar and wind power into the grids across the country, utilities and grid operators are worried that they will have a harder time dealing with power fluctuations of their grids. Solar and wind electricity would flow into a grid only when the sun shines and the wind blows, so the grid operator needs to be able to get extra power to make up for any sudden shortfall.

Energy storage technologies like Beacon’s promise to respond to grid operators’ need for power more quickly and cheaply. If they can compete in performance and price against natural gas plants, then energy storage plants could generate steady revenues by being the suppliers of choice for grid operators. AES announced Tuesday that it’s installing 40 megawatts of batteries to provide the same grid regulation service to PJM.

The New York grid operator, to which Beacon has been selling its service from the Stephentown flywheel plant, has been implementing this new federal rule gradually and is finalizing that plan this month. PJM also is in the final stage of finishing its deployment.

“The Stephentown operation is a very good success story for us in terms of how that’s working out and how the flywheel is performing,” Brits said.

Beacon expects to complete the Hazle project and bring it online in the second quarter of 2014. The project will cost just over $50 million, which will come from Rockland as well as two grants from the federal government and Pennsylvania. Beacon expects to start making profits next year, Brits said.

The company is now looking at developing projects in other parts of the country that are carrying out the federal mandate, such as California and states covered by the Midwest Independent Transmission System Operator.

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